The trade in Pelargonium sidoides: Rural livelihood relief or bounty for the ‘bio-buccaneers’?

Abstract

Historically, the trade benefits of medicinal plants have been skewed towards technologically advanced Northern countries, despite originating from the biologically rich South. Since the 1990s, attempts at rectifying this situation have been stepped up globally. In southern Africa, a substantial industry has developed around the use of the endemic plant Pelargonium sidoides as a cure for respiratory tract infections. Rural communities harvest the plant for trade and also hold traditional knowledge about it. However, the industry has been plagued by concerns about the sustainability of the resource and equitable sharing of benefits, and accusations of ‘biopiracy’. This study examines the value chain to identify blockages preventing better benefit capture by the rural poor. We conclude that the Biodiversity Convention offers opportunities for redress but that monopolistic control, complex and uncoordinated laws, elite capture of benefits and increased cultivation undermine benefit sharing. These problems need to be overcome if rural communities are not to lose their benefits to large corporations exploiting Pelargonium sidoides.

Keywords:

• access and benefit sharing
• bioprospecting
• non-timber forest product
• Pelargonium sidoides
• traditional knowledge
• value chain

1. Introduction

The past few decades have witnessed a metamorphosis in the international trade in products derived from biodiversity. Historically, such resources were commercialised and used by wealthier Northern countries, with few benefits accruing to provider nations in the less developed South (Juma, 1989). Since the mid-1980s, pressure has mounted for the reversal of this trend and efforts have been made to establish more equitable exchange relations between provider and user nations. This change in approach has been precipitated by scientific and technological advances in the biosciences and an increased trend for companies to claim ownership of products, alongside fears of wide-reaching biodiversity loss (ten Kate & Laird, 1999). Using their leverage as the main repositories of biodiversity, the biologically rich countries of the developing world have argued that if companies from the technologically rich developed world want access to their biodiversity and traditional knowledge they must transfer technology and share the benefits from biodiversity commercialisation. Developing countries have further justified this argument by pointing to the need to conserve economically important biological resources in developing countries (Sanchez & Juma, 1994). People have begun to realise that natural resources can be used in a sustainable manner, thereby guaranteeing their preservation for future use, and that this will have the additional benefit of alleviating rural poverty (Simpson, 1999). This notion was formalised by the adoption of the Convention on Biological Diversity (CBD) at the United Nations Earth Summit in Rio de Janeiro in 1992. Besides promoting the conservation and sustainable use of natural resources, the CBD requires its 193 signatories to share the benefits arising from the use of genetic resources with the providers who granted access – a concept known as ‘access and benefit sharing’ (ABS). This notion extends beyond access to genetic resources to the use of traditional knowledge associated with resources. As an instrument of the CBD, the Nagoya Protocol was negotiated in 2010 to further elaborate requirements for ABS by member states (CBD, 2010).

Since the inception of the CBD, awareness of ABS has grown worldwide and the concept has gradually been integrated into the policies and laws of both user and provider countries. South Africa, a nation with rich biodiversity, is one of the leaders on the African continent with regards to benefit sharing, having incorporated ABS provisions into a number of its policies and laws, including regulations which prescribe the permitting arrangements for the functioning of the ABS process.1

Legislative measures governing ABS in South Africa were introduced with the objectives of the CBD in mind; that is, use of the country's biodiversity in a manner which both fosters conservation and contributes to the upliftment of the rural poor. It was further hoped that the country would benefit on a national scale from the transfer of knowledge and technology from more advanced nations and corporations conducting bioprospecting (the exploration of biodiversity for commercially valuable components) within South Africa's borders (DEAT, 1997). However, introducing ABS in South Africa has proven to be problematic, with both users and providers expressing frustration and uncertainty about the process (Wynberg & Taylor, 2009).

To explain the possible barriers to the attainment of more equal exchange relations in natural product value chains, this paper draws on evidence from the commercialisation of Pelargonium sidoides, a member of the Geranium family that occurs in the eastern parts of South Africa and much of Lesotho. The plant is widely used locally as a traditional medicine. Its red tubers are the raw material which is the main ingredient of a successful cure for respiratory tract infections such as coughs, colds and bronchitis almost exclusively manufactured and distributed by a multinational pharmaceutical company based in Germany, with annual revenues amounting to millions of euros (Brendler & Van Wyk, 2008). The nature of the P. sidoides industry has changed rapidly in recent years – from largely unregulated heavy exploitation, to a tightly controlled trade chain subject to a complex array of legislative requirements, with ABS playing a prominent role. Through a review of the industry, the Pelargonium value chain, and the policy and legal framework governing biodiversity trade in South Africa and Lesotho, this paper identifies blockages which prevent more equitable benefit capture by the rural poor.

2. Methods and study area

Field work for this study of the Pelargonium trade was undertaken between February and April 2009 in the Eastern Cape Province of South Africa and the Quthing District in Lesotho (van Niekerk, 2009). Both are areas where wild harvesting of P. sidoides has taken place for several years, and the parts where most of this harvesting is done display similar socioeconomic characteristics: high rates of unemployment, poverty and limited economic opportunities. The Eastern Cape is the province with the highest unemployment rate in South Africa, standing at nearly 29% in 2010 (Stats SA, 2010) with joblessness among the Xhosa-speaking population rising to 66% (FHISER, 2006). The widespread poverty in the province may be traced back to the apartheid era when large numbers of people were concentrated in the former ‘homelands’ of Transkei and Ciskei (PROVIDE, 2005). In Lesotho, the post-colonial period has been marked by an increase in poverty levels and at 52% the kingdom has one of the highest unemployment rates in the world (GPN, 2006). The majority of the population, 80%, rely on subsistence farming (Mokuku et al., 2004). Infrastructure development in rural areas is low, with electricity and piped water supplied to only 2% of households (Lawson, 2007).

A range of methods was used to gather data. This included a review of published and unpublished literature on Pelargonium, ABS and biodiversity trade and an analysis of existing laws, policies and permits. Semi-structured interviews were held with key informants in government and industry. The perspective of national government authorities was obtained from interviews with members of the National Department of Environmental Affairs (DEA) in South Africa, and the National Environmental Secretariat (NES) in Lesotho. In South Africa the provincial authority responsible for biodiversity management was interviewed, as well as local conservation authorities. The perspective of industry was obtained from interviews with five members of companies actively involved in the supply chain of raw material from South Africa and Lesotho to Germany.

In the Eastern Cape, focus groups were held with harvesters in the villages of Lokwe and Nkcwankcewa near the town of Alice in the Amathole District Municipality (see Figure 1). In the Quthing District, southern Lesotho, focus groups were held with harvesters in the villages of Tsatsane and Ha-Thlaku (see Figure 2). In both South Africa and Lesotho, guiding questions were used to estimate the level of involvement of harvesters in the Pelargonium industry and to gauge the degree to which harvesters benefited. Identical questions were used in South Africa and Lesotho in order to enable comparison. In both countries local interpreters who were familiar with the communities were employed. Two workshops were attended, organised by the NGO TRAFFIC (the wildlife trade monitoring network), to introduce the proposed Biodiversity Management Plan (BMP)2 for P. sidoides to stakeholders. Data were triangulated by comparing findings from informant interviews, focus groups and the published literature.

Figure 1: The Amathole District Municipality, Eastern Cape Province, showing the villages selected for research

Figure 2: Quthing District, Lesotho, showing the field sites where focus groups were held

3. The Pelargonium industry and value chain

An interesting chain of events marks the development of P. sidoides from a traditional remedy exclusive to southern Africa into a successful herbal medicine available on supermarket and pharmacy shelves worldwide. In 1897 a young Englishman named Charles Henry Stevens came to southern Africa in the hope of recovering from tuberculosis (An English Physician, 1931). According to Sechehaye (1930), Stevens was treated in the highlands of Lesotho by a ‘witch doctor’ with a local remedy, later revealed to be extracted from the tubers of the P. sidoides plant. After three months, Stevens started gaining weight and left for Cape Town with a stock of the tubers. Upon his return to England, he was declared healthy by his doctor and set about commercialising a remedy based on the healer's preparation which he called ‘Stevens’ Consumption Cure' or alternatively ‘umckaloabo’.

Even though Stevens had support from some quarters, controversy ensued as to the efficacy of the remedy, leading the British Medical Association to accuse him of quackery and fraud and ordering him to pay substantial costs (BMA, 1909). Nonetheless, Stevens continued to market the remedy with some success until his death in 1942, whereupon his son sold the company (Newsom, 2002).

Despite numerous attempts to discover the identity of the plant used in the preparation, this remained a closely guarded secret until 1974 when a doctoral study commissioned by the German company ISO-Arzneimittel correctly identified the plant material as either P. sidoides or the closely related P. reniforme (Bladt & Wagner, 2007). The revelation of the plant ingredients prompted further pharmacological research into the active constituents and a series of clinical trials demonstrated the efficacy of the red tubers of the two Pelargonium species for treating bronchial conditions (Brendler & Van Wyk, 2008). In 1983 ISO-Arzneimittel began marketing ‘EPs 7630’, the liquid herbal extraction on which the modern phytomedicine ‘Umckaloabo’ is based.3 When multinational pharmaceutical group Dr Willmar Schwabe GmbH (hereafter ‘Schwabe’) bought out ISO-Arzneimittel in 1987, Umckaloabo became one of Schwabe's top-selling plant-based remedies, with annual revenues in Germany rising from €8 million in 2001 to €80 million in 2006 (Brendler & Van Wyk, 2008). Umckaloabo remains one of Schwabe's top-selling phytomedicines and it is predicted that sales will continue to rise in future as demand for natural cold-cure products grows (interview, F Waimer, Head of Processing, Schwabe, Karlsruhe, 30 June 2009). Although both P. sidoides and P. reniforme have been investigated for their potential therapeutic value, the modern trade focuses on the former species, with much of the raw material being collected from the wild in the Eastern Cape Province of South Africa and parts of Lesotho. Estimates of volumes harvested vary significantly, ranging from a conservative 26 tonnes of wet harvested material to a maximum of 440 tonnes per annum.4

The P. sidoides supply chain is illustrated in Figure 3. An unknown number – probably amounting to hundreds – of harvesters collect and sell the tubers to half a dozen local and intermediary buyers. In the Eastern Cape, a local buyer operating under the name Gowar Enterprises collects and transports the material to an intermediary buyer based in the Western Cape, BZH Export & Import, where the tubers are dried, shredded and packaged. In Lesotho, Bophelo Processing fulfils the same functions as Gowar Enterprises and BZH Import & Export combined. The dried material is routed to Parceval, a pharmaceutical manufacturer and former subsidiary of Schwabe which not only supplies the South African market with P. sidoides raw material and tinctures, but also acts as exporter in the international P. sidoides value chain. After the material has been shipped to Germany, further processing or value adding takes place, such as extraction of the tincture, manufacturing of Umckaloabo and related products, packaging and distribution. Schwabe, the world's main buyer of Pelargonium raw material, supplies markets in Germany, other European countries and the US, and has plans to roll out the product further (interview, F Waimer, 30 June 2009).

Figure 3: The international P. sidoides value chain circa 2010

4. Findings

4.1 Monopolistic behaviour threatens livelihoods

The research revealed a number of obstacles to benefit sharing along the Pelargonium value chain. A central finding was the vulnerability of harvesters in the face of Schwabe's near monopoly of the Pelargonium trade. Monopolistic control, a suite of patents relating to extraction and production methods for Pelargonium, and vertical integration (reflected, for example, in the exclusive relationship between Schwabe and Parceval) characterise an industry where the benefits that flow to producers are very limited, and where there are major differences in the bargaining positions of the manufacturers and the primary producers. The governance of the value chain can thus be characterised as both ‘captive’, because the small suppliers are heavily dependent on the much larger buyers for their transactions, and hierarchical, because there is strong managerial control and vertical integration (Gereffi et al., 2005). These trends are by no means unique to the P. sidoides value chain and the literature is replete with other examples of dominance that hinder small producers from entering the market (e.g. Nicholls & Opal, 2005).

As the dominant buyer in the Pelargonium trade, Schwabe's position in many ways reflects the monopolistic role played by many herbal companies in Germany. Schippmann et al. (2006) note that Germany ranks fourth and third as importer and exporter of medicinal plants respectively, figures considered to signify the ‘turntable’ role that Germany plays for medicinal plants worldwide. A further indication of this is that most plant material imported into Germany is unprocessed, with value-adding mostly taking place on German soil (Lange, 2006). Such levels of control over price, demand and processing have serious implications for suppliers further down the value chain, and are further entrenched through the use of patents and other IPRs (intellectual property rights) which create barriers that make it difficult for non-affiliated companies to enter the market.

The lack of competition between buyers in the Pelargonium trade plays a role in the price harvesters receive for their labour. Focus group discussions in the Eastern Cape and Lesotho revealed that harvesters were paid between R2 and R4 ($0.29 and $0.59)5 per kilogram of wet harvested material, amounting to a monthly income of R200 to R850 ($29 to $125). Although not substantial enough to lift harvesters out of poverty, the income that Pelargonium provides is a welcome supplement to limited rural livelihoods. One harvester in HaTlhaku village in Lesotho remarked that it had changed her life because she could now visit the doctor and buy furniture for her home.

In South Africa the price was established by the industry on the basis of the average daily wage of a farm worker, and in Lesotho it was negotiated between the NES and the traders. In both cases the harvesters themselves were unable to negotiate a better price, and the price appeared to bear little relation to the market price secured by Schwabe.6 This weak bargaining power remains one of the factors which predestines harvesters to remain poor (Belcher et al., 2005).

This finding is similar to many other findings elsewhere in the world which indicate that returns from NTFPs (non-timber forest products) such as P. sidoides mostly make up shortfalls in income or serve as a buffer in hard times, rather than playing a meaningful role in poverty alleviation (e.g. Tewari, 1993; Neumann & Hirsch, 2000; Wynberg & Laird, 2007). Indeed, a lively debate has developed about the extent to which NTFP extraction contributes to the perpetuation of poverty in rural communities. Certainly there is evidence to support the argument that people engage in the NTFP trade because they are poor, but a compelling case can also be made to demonstrate that the nature of extractive markets keeps wages and prices for harvesters low, and that profit shares increase with processing as the product moves closer to the consumer (Neumann & Hirsch, 2000). To put it simply, it may to some extent be true to say that the NTFP trade traps people in poverty.

The lack of alternative economic opportunities in the communal lands where P. sidoides is collected means that poor people are willing to engage in the trade. However, its contribution to their livelihoods remains minor for a number of reasons. The remoteness of the areas where the plant grows means that infrastructure is poorly developed and harvesters have little access to information such as changes in market value (Angelsen & Wunder, 2003). Limited knowledge and understanding of markets and the commodity chain, as well as the low numbers of traders, reduces the harvesters' bargaining power (Williams & Kepe, 2008). The low density of the resource means that they have to cover large areas when collecting from the wild, thereby incurring high costs and receiving low net revenues. The combination of these factors, aggravated by the limited access to assets such as capital, credit, technology and skills which precludes movement beyond the phase of wild gathering, results in low returns for harvesters in the Pelargonium trade. This finding resonates with many other examples around the world (Belcher et al., 2005) and also affirms Ribot and Peluso's tenet that access to these assets is central to securing benefits (Ribot & Peluso, 2003).

4.2. Complex, uncoordinated laws and inappropriate ABS requirements can hinder benefit sharing

Access and benefit-sharing laws in South Africa and Lesotho have developed partly in response to such concerns, and to bring use of the resource in line with commitments under the CBD. By requiring users to obtain the prior informed consent of resource providers and to share benefits with them, the legislation attempts to restore past imbalances in biodiversity trade and use of traditional knowledge. However, using the law to redress imbalances in the Pelargonium trade has been problematic on several fronts and an important finding of this research is that rather than facilitating benefit sharing, laws may in fact hinder its attainment.

An increasingly important debate concerns the scope of ABS. On the one hand, raw material comprising the plant's tubers has been traded for many years as a commodity for the manufacture of pharmaceuticals – commonly referred to as ‘biotrade’ (UEBT, 2007). On the other hand, the biochemical properties of the plant have been the basis for several patents and extracts, falling squarely into the realm of genetic resource use, bioprospecting and thus CBD requirements. Distinctions between these categories of genetic and biological resources are becoming more difficult to determine, especially when holders of traditional knowledge are involved (Wynberg & Taylor, 2009). In South Africa, ABS laws adopt a wide definition of ‘bioprospecting’ and ‘indigenous biological resources’, both of which go beyond research involving genetic material or biochemical material and the development of that material for commercial purposes. Benefit-sharing agreements are thus a legal requirement for the Pelargonium trade.

In order to comply with these new requirements, Schwabe, in conjunction with its local partner Parceval, has negotiated benefit-sharing agreements in South Africa with King Sandile, the leader of the Xhosa nation, as well as members of the Imingcangathelo Community Development Trust (hereafter the ‘Trust’) who are closely aligned with the local chieftainess. The permit applications, submitted on 30 September 2008, had not yet been approved by DEA at the time of writing some 20 months later although a summary of the benefit-sharing agreement was published for public comment on 2 July 2010, followed by a stakeholder meeting in November 2010 (DEA, 2010a).The DEA's hesitation in approving the agreements has inadvertently strengthened the near monopoly held by Schwabe since any buyer who was not (legally) active in the industry prior to 2007 has in effect been excluded from trading since then.

It is important to ask how and why these agreements were negotiated, given that Pelargonium occurs widely throughout South Africa and indeed, somewhat ironically, was first collected by Stevens in Lesotho. The relationship between the Trust and the industry stemmed from contact established by Trust members with the managing director of Schwabe's then-subsidiary Parceval, in 2008. With the help of the local municipality, the Trust had set up a medicinal plant nursery, and while looking for a market for their Pelargonium they approached Parceval. This company noted that it was a natural step to work with the members of the Trust because ‘it seemed an obvious choice to work with something which is organised and has a structure behind it’ (interview, U Feiter, Managing Director, Parceval, Wellington, Western Cape, 29 April 2009).

The fact that the industry has negotiated its first benefit-sharing agreement with this specific community highlights the complexity of ABS in South Africa. With a resource that is as widely spread as Pelargonium and with traditional knowledge associated with the plant also being widely known, the question of which community or which traditional knowledge holder to conclude agreements with becomes increasingly convoluted and difficult to answer.

The benefit-sharing agreement between the Trust and industry is evidence that communities with high levels of organisation are favoured when agreements are negotiated. The implication is that other, less organised, communities – generally the poorer members of society, are likely to be excluded from direct engagement with industry, even though they are custodians of the resource. In this instance it is clear that those with close ties to the local traditional leader have benefited most from the Pelargonium trade.

The difficulty of identifying appropriate beneficiaries is one of the causes of tension throughout much of South Africa about the powers and role of traditional authorities (Ntsebeza, 2002). The Masakhane community7 falls under the same traditional authority as the Trust; however, they do not recognise the local chieftainess as their leader. The Masakhane community, with support from a South African NGO, the African Centre for Biosafety (ACB), have opposed the benefit-sharing agreements between the Trust and industry and claim that they hold traditional knowledge which was misappropriated by Schwabe. Members of Masakhane accompanied the ACB to the European Patent Office (EPO) in January 2010 where they challenged the patent held by Schwabe over the extraction method for Umckaloabo production (see Section 4.4).

The large number of often uncoordinated laws regulating the collection and export of Pelargonium material from southern Africa adds to these concerns (Table 1). In South Africa, the harvesting of wild P. sidoides in the Eastern Cape started in the late 1990s and intensified around 2001 as demand for Umckaloabo rose. Originally, harvesting permits were issued to local buyers by the provincial authority, the Department of Economic Development and Environmental Affairs (DEDEA). Then gradually, as concern grew about the sustainability of wild harvesting, authorities imposed more and more stringent permitting conditions, such as requiring that a portion of the harvested material be replanted. However, permit conditions were transgressed, with little or no cultivation taking place and wild harvesting continued unchecked throughout the province (interview, N Bam, Deputy Director: Biodiversity Conservation Management, DEDEA, Bhisho, 8 April 2009). Unease about volumes harvested led to the instigation of a temporary ban on wild harvesting in the province in 2007. When the BABS (Bioprospecting, Access and Benefit Sharing) Regulations came into effect in April 2008, those already active in the industry were given time to align their activities to the regulations and submit their applications to the DEA. The ban on wild harvesting was partially lifted in 2009, giving stakeholders with applications awaiting approval the opportunity to ply their trade.

Table 1: Legislation regulating the commercial use and export of P. sidoides

Legislation	Details
South Africa
National Environmental Management: Biodiversity Act (No. 10 of 2004) (NEMBA)	Chapter 6 of the Act provides for equity in bioprospecting by requiring applicants to:
	• disclose all material information relating to a project,
	• obtain PIC,
	• enter into benefit-sharing agreements,
	• conclude MTAs.
	Chapter 7 of the Act outlines the permitting arrangements for bioprospecting involving IBR and the export of IBR.
NEMBA (No. 10 of 2004)	Section 43 provides for the implementation of BMPs and can apply to ecosystems, indigenous species and migratory species.
National Environmental Management: Protected Areas Act (No. 57 of 2003)	Provides for the declaration of protected areas, should P. sidoides be found in such areas. The Act promotes the sustainable use of IBR as long as ecological integrity is maintained.
National Environmental Laws Amendment Act (No. 14 of 2009)	Among other matters, amends NEMBA to introduce a notification procedure for the discovery phase of a bioprospecting project; and takes into consideration knowledge of specific individuals when issuing specific bioprospecting permits.
Intellectual Property Laws Amendment Bill (2010)	The proposed amendments seek to give effect to the government's policy to recognise indigenous knowledge as a national heritage and asset.
NEMBA Regulations on Bioprospecting, Access and Benefit Sharing No. R138 of 2008) (BABS Regulations)	Sets out the prescribed format, contents and requirements of benefit-sharing agreements and stipulates that foreigners may only apply for bioprospecting and export permits jointly with a South African partner; requires export of IBR to be in the public interest; and makes provision for integrated bioprospecting and export permits.
Provincial Ordinances and Acts	Several legal instruments for nature conservation – placing restrictions on harvesting IBR and prescribing permitting arrangements for research – exist at the provincial level. Many of these Acts and Ordinances are outdated and are in the process of being phased out. An example from the Eastern Cape is the Nature Conservation Act (No. 10 of 1987) Republic of Ciskei which declares P. sidoides a protected species and therefore requires permits to harvest it in the region of the Eastern Cape province formerly known as the Ciskei.
Lesotho
The Environment Act of 2001 (to be repealed by the Environment Act of 2009, but regulations giving effect to the sections dealing with ABS have not	Restricts certain activities unless an environmental impact assessment licence is obtained from the Environment Authority.
come into effect)	Section 66 prohibits or restricts trade in any component of biological diversity.
The Environment Act 2009	The Act provides for the conservation of Lesotho's IBR and more specifically:
	• Section 66 allows for guidelines to integrate traditional knowledge for the conservation of biological diversity with mainstream scientific knowledge to be issued.
	• Section 68 provides for guidelines to be issued with regard to arrangements for access to the genetic resources of Lesotho, and sharing of benefits derived from their use.
Local Government Act 1997	The Act specifies the mandate of the Community Councils that relate to the environment and grants Local Councils control over natural resources, environmental protection and other communally owned property.
Historical Monuments, Relics, Fauna and Flora Act 1967	Requires the written consent from the Protection Preservation Commission before floral resources can be harvested.
	The list of plants protected under the Act was amended by Legal Notice No. 93 of 2004 to include more species, including P. sidoides.
Legal Notice No. 93 of 2004	Lists P. sidoides as a protected species.
The National Parks Act 1975	Provides details of resource management mandates within National Parks.
The Trade Enterprises Order 1993	Provides for Traders' Licences to be issued by the Ministry of Trade, Industry, Cooperatives and Marketing.
Notes: ABS = access and benefit sharing, BMP = Biodiversity Management Plan, IBR = indigenous biological resource, MTA = material transfer agreement, PIC = prior informed consent.

Changes in legislative arrangements in South Africa had a direct effect on the trade in Lesotho, where the volumes of material harvested increased as a result of stricter permit conditions in the Eastern Cape, and again when the ban on wild harvesting was implemented. Escalating illegal harvesting, particularly in 2003, led to the species being listed as protected in Lesotho the following year (Newton et al., 2009).

Inconsistent and unconsolidated legislation in Lesotho has further thwarted attempts to conserve P. sidoides and ensure equitable benefit sharing (Newton et al., 2009). A company wanting to harvest P. sidoides requires an Environmental Impact Assessment clearance letter from the NES and is expected to apply for a permit from the Protection Preservation Commission – this entity is however non-functional. If the company wants to export, it has to apply for a trader's licence from a different Ministry. Moreover, despite the fact that regulations giving effect to the ABS provisions in the Environment Act (2009) are not yet in force, the government requires companies to conclude benefit-sharing agreements with communities. In 2009 a benefit-sharing agreement was concluded between Bophelo Natural Products, NES and 24 communities. In contrast to the procedure in South Africa, the agreement was first negotiated between the company and NES, whereafter it was circulated to the traditional leaders of the respective communities for their comment.

These convoluted procedures, along with the difficulty of identifying beneficiaries, have added to the burden of South Africa and Lesotho's national departments of environment, already constrained by a lack of capacity, resources and knowledge (Wynberg & Taylor, 2009), in making decisions related to ABS which are deemed to be fair and equitable. They also reflect a broader problem: because ABS is included in the CBD and national biodiversity laws, environmental departments are now charged with making decisions about intricate issues of social and cultural identity that have not historically been the responsibility of these departments and arguably do not belong in their mandate. The comment that the department would ‘simply liaise with the chiefs or traditional authorities as the representative bodies of communities to negotiate benefit-sharing agreements’ (DEA, 2010b) illustrates the naivety of this approach, as is further explained in the next section.

4.3 Guarding against elite capture of benefits

Even when the right communities are identified, major problems can arise with the distribution of benefits, an issue well illustrated by the Hoodia case (Wynberg et al., 2009). This is exacerbated where tenurial arrangements are unclear, and where traditional authorities are not widely accepted by communities. Combined, these power dynamics can create opportunities for ‘elite capture’ – thus preventing the most marginalised from benefiting. In the case of Pelargonium, harvester communities in both South Africa and Lesotho are typically governed by communal land tenure arrangements. In the Eastern Cape, traditional authorities are responsible for the allocation of residential and arable land for up to 93% of households in the former Transkei and Ciskei (Bank & Mabhena, 2010). Although this situation appears to be tolerated, the majority of inhabitants would prefer greater tenure security and feel that the extensive powers of the traditional authorities and their hand-picked advisors needed to be curbed (Bank & Mabhena, 2010).

In Lesotho, almost all land is held in trust by the King, who delegates this trust to village chiefs who in turn have the authority to allocate land to citizens (Ambrogetti, 1997). Another level of traditional authority was introduced in 1997 by the Local Government Act, which grants Local Community Councils control over natural resources and communally owned land. However, although several tiers of traditional leadership are in place, natural resources in Lesotho have suffered damage due to inadequate control of communally held property rights (Letsela et al., 2003).

Elite capture of benefits is well recognised in the literature as a major blockage for equitable benefit sharing (e.g. Ribot, 2003; Child, 2009; Mbatha, 2011). This is illustrated by the benefit-sharing agreement negotiated in the Eastern Cape between the Trust and industry. Members of the Trust were selected because of their high level of organisation, which can be directly linked to their close ties with their traditional leader. As Ribot & Peluso (2003:170) observe, the ruling elite, along with state and non-state actors, form part of the ‘web of powers’ that enables people to benefit from resources and maintain access to factors of production and exchange. Ultimately, in the case of Pelargonium, the power to allocate or retract land vests with the local traditional authority (Ambrogetti, 1997; Bank & Mabhena, 2010). In the Eastern Cape, the local chieftainess has declared that she will be responsible for obtaining harvesting permits in the future and has urged harvesters to route any material via her. This has been met with disapproval by many communities, particularly the Masakhane community, who do not recognise her as their legitimate leader (personal communication, A Dold, Curator, Selmar Schonland Herbarium, Grahamstown, 8 April 2011).

The above example demonstrates what frequently occurs when the value of a resource increases: the elite may show interest in the resource for the first time and, using their political connections, power and greater access to capital, may exclude the poor by controlling market, production and processing chains (Belcher & Schreckenberg, 2007). The ruling elite may also allocate resource access along identity lines, adding to the ethnic and other social inequities that make the playing field uneven for the rural poor (Ribot & Peluso, 2003).

4.4 The CBD (Convention on Biological Diversity) provides a platform for traditional knowledge issues to be addressed

The use of traditional knowledge in commercial Pelargonium products has given rise to much debate. Schwabe's commercialisation of the resource, and in particular the related patents held by the company, have led to accusations of ‘biopiracy’ (ACB, 2008) – a term which describes the way corporations or researchers misappropriate genetic resources or traditional knowledge, typically through intellectual property rights, without the consent of resource or knowledge owners (Dutfield, 2002).

P. sidoides is widely used as a local remedy mainly for gastro-intestinal complaints, whereas the modern medicine Umckaloabo and related preparations are formulated for treating respiratory tract infections. However, knowledge for this preparation was originally obtained from a local healer in Lesotho at the turn of the 20th century. Such knowledge is not well documented (Brendler & Van Wyk, 2008) but this does not mean that it does not exist. As part of a patent challenge brought against Schwabe for an extraction method used in the preparation of Umckaloabo, traditional healers from the Masakhane community, supported by the NGO ACB, submitted affidavits to the EPO stating that they use the plant for various ailments, including respiratory conditions (e.g. Ngethu, 2008). The challenge was also brought by other NGOs and competitors of Schwabe who objected to the patent on the conventional grounds of lack of novelty, lack of inventive step and insufficiency (not enough information on how to work the patent). Although the biopiracy arguments were rejected by the EPO, the patent was revoked on 26 January 2010 for lack of inventive step.

Three months later Schwabe announced in a press release that it would no longer pursue four other Pelargonium patents (see Table 2). The company stated that it did not wish to be singled out as a ‘scapegoat’ in the public debate over patents and biopiracy, claiming that the problem was caused by a complex area of conflict between the CBD and international patent law and was therefore beyond their control (Schwabe Pharmaceuticals, 2010). The company disliked being labelled ‘bio-buccaneers’ (interview, F Waimer, 30 June 2009) and stressed the fact that, as a family-owned company, it was important for them to respect the people in provider countries as partners. In a gesture aimed at demonstrating their social commitment to South Africa, Schwabe donated one million euros to the newly established ‘Umckaloabo Trust – For a Healthy Future’ which would finance the construction of a scout centre in Mpumalanga Province as its first major project (Schwabe Pharmaceuticals, 2010). Ironically, this has little to do with harvester communities, or the geographical area from which Pelargonium is collected. More broadly, however, the outcome of the patent challenge has revealed the potential of the CBD to address issues relating to the unfair exploitation of traditional knowledge, albeit obliquely. In this case, it occurred through the power of the media and concern about negative corporate publicity, rather than through the formal mechanisms of the patent appeal courts. This is an important outcome which has implications for the way these matters are advocated at an international level.

Table 2: Pelargonium-related patents held by Schwabe

Patent number	Description
Patent revoked by the EPO (European Patent Office) on 26 January 2010
EP 1429795	Method for extracting the substance used to make Umckaloabo
Patents withdrawn by Schwabe on 26 April 2010
EP 1684775; DE 10350338	Use of Pelargonium extracts in disease-related changes in behaviour
EP 1651244	Use of Pelargonium extracts in HIV infections and AIDS
EP 1878434	Use of Pelargonium extracts in Helicobacter pylori infections
EP 1763520, DE 102004032440, DE 102004063910	Certain single substances from Pelargonium and their use in certain medical conditions
Patents still held by Schwabe
EP 1982731	Patent for the stabilisation of liquid preparations
EP 2134369	Patent for the manufacture of a special dry extract

4.5 Cultivation and benefit sharing

With demand for Pelargonium-based products rising, it is expected that management of the resource through measures such as cultivation will intensify (Belcher et al., 2005). Although concern about the sustainability of an industry based on wild collection has been expressed from many quarters (Lewu et al., 2007; ACB, 2008; Newton, 2009), it is likely that a swing towards cultivation will have profound negative implications for harvesting communities. While cultivation may help to address ecological concerns, it will not necessarily resolve issues of equity. Cultivation requires significant inputs, including seedlings, fertiliser, water and land, and it is unlikely that rural communities will be in a position to farm Pelargonium without significant subsidisation and support. This is a finding common to many NTFPs that are globally traded. Increases in demand and thus scale typically require resources to be cultivated, shifting the trade to new beneficiaries. The poor cease to partake and instead benefits are captured by those with land, capital and capacity (Homer-Dixon et al., 1993; Williams & Kepe, 2008). Cultivation requires that participants have secure land tenure, a degree of assurance that a future market exists, and the economic stability to be able to wait for the product to mature (Belcher & Schreckenberg, 2007). In the case of Pelargonium, the poorer sectors of society without financial capital and strong connections to industry and government agencies stand to be excluded.

At present, cultivation of Pelargonium in southern Africa is not widespread. The most significant plantation of P. sidoides, a 45 hectare field at a farm owned by Parceval, was abandoned in 2009 because growing conditions were unsuitable, and apart from relatively new plantations in the Free State Province and a few hectares planted by communities in the Eastern Cape and Lesotho, cultivation of the plant is not extensive in southern Africa. A variety of reasons have been given for this, including economies of scale and the plant's slow regeneration rate (interview, U Feiter, 29 April 2009). However, a growing concern is the initiation by Schwabe of large-scale cultivation of P. sidoides in Kenya and Mexico (ACB, 2008). This was apparently done in order to secure a regular supply of the resource at a time when permitting arrangements in southern Africa were becoming stricter (interview, U Feiter, 29 April 2009). The fact that the resource is cultivated and traded outside the area where it naturally occurs raises important questions about whether the genetic material was exported in compliance with NEMBA and the BABS Regulations in South Africa and associated arrangements in Lesotho, and the loss of benefits to southern Africa. Indeed, it is precisely this sort of activity that led to the negotiation of the CBD and the promulgation of national laws in the first instance.

5. Conclusion

The CBD represents a small step forward in restoring unequal exchange relations between North and South (Schroeder, 2009). However, as the case of the Pelargonium industry illustrates, the trade in genetic resources from southern Africa is a long way from realising equitable benefits. While the governments of South Africa and Lesotho are trying to regulate access to Pelargonium in a manner which favours the rural poor, protects the resource from over-exploitation and instils fairness and equity along the value chain, their efforts have thus far seen limited results due to the sheer complexity of bringing a valuable biological resource to market in a modern, globalised world.

Restrictions placed on the industry via new legislative measures are driven by the wish to uplift impoverished rural communities and at the same time bring wider benefits to southern Africa through the sharing of technological advances. However, very little technological expertise has been transferred – instead, these tighter controls have brought with them an array of unintended negative effects. These have included the forfeiture of income for rural harvesters as a result of the harvesting ban in the Eastern Cape, confusion and frustration for industry members and communities alike because of the complex new permitting arrangements, conflict among communities, and loss of wild stocks as a result of continued illegal harvesting.

Significantly, harvesters continue to lack enterprise ownership in the Pelargonium industry, a characteristic that commentators consider to be critical to the social robustness of a value chain (e.g. Maynard et al., 2001). Achieving ownership is vital, but once this is achieved the owners are faced with the question of how to achieve greater economies of scale (or, in the parlance of value chain analysis, be ‘downgraded’8) so as to secure a stable and profitable position but without reducing their benefits. Paradoxically, raising the value of a resource does not translate into better earnings for rural harvesters. Instead, divisions may occur along lines of social differentiation which may exclude the poorest sectors of society and may see the elite becoming more interested and exerting their power in order to reap more benefits from production or exchange. Moreover, the resource itself may be harmed by over-harvesting.

In conclusion, legislative interventions implementing benefit sharing as visualised by the CBD should not be seen as the only way to improve the lot of producers from the South. Many other factors, such as weak bargaining power, social and economic barriers to market access, lack of infrastructure, insecure land tenure systems and limited access to capital, credit and technology, need to be addressed if the rural poor are to become sufficiently empowered to enter into exchange relations with sophisticated international companies on more equal terms.

Notes

¹The Bioprospecting Access and Benefit Sharing (BABS) Regulations in terms of the National Environmental Management Biodiversity Act (NEMBA) (No. 10 of 2004) came into force on 1 April 2008.

²NEMBA (South Africa) provides for the compilation of Biodiversity Management Plans in Section 43. A draft BMP for P. sidoides has been compiled and will be published for public comment by the DEA.

³The origin of the name ‘Umckaloabo’ is unclear, but it may be based on the Zulu words umKhulane, a term for various ailments with symptoms such as fever and coughing, and uHlabo, meaning ‘stinging breast pain’ (Bladt, 1974, cited in Brendler & Van Wyk, 2008).

⁴Precise figures could not be deduced from harvesting permits because much of the harvesting is done illegally and is therefore not recorded (interview, N Bam, 8 April 2009). Moreover, representatives of Schwabe would not disclose the volumes of material sourced from southern Africa. Estimates given are thus based on information gathered during interviews conducted for this study, published work (Lewu et al., 2007; Newton, 2009) and triangulation of results from focus group discussions.

⁵Exchange rate at 31 March 2011: 1USD = 6.8ZAR.

⁶The Pelargonium industry is shrouded in secrecy and it was extremely difficult to obtain figures relating to the costs of production, Schwabe's costs for research and development, and volumes produced. We are therefore unable to provide a reliable comparison between the price received by harvesters and the retail price per kg.

⁷The Masakhane community group consists of residents from various farms in the Alice area which were previously occupied by white farmers.

⁸Gibbon & Ponte (2005) use the term ‘functional downgrading’, as an antonym to ‘upgrading’, to explain the way producers may focus on fewer or simpler products while increasing volumes or quality, or give up processing to focus on production.